illy Sustainable Value Report

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ILLY REPORT 2012

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ILLY REPORT 2013

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ILLY REPORT 2014

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ILLY REPORT 2015

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ILLY REPORT 2016

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SALGADO

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ETIOPIA SCUOLA

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Virgolino Adriano Muniz 1

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Virgolino Adriano Muniz 2

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Virgolino Adriano Muniz 3

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Lucia Carmen Lucia Chavez de Brito

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GONZALES

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Adolfo Vieira

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SOCIAL VALUE

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ENVIRONMENTAL VALUE

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ECONOMIC VALUE

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BILANCIO ILLY 2016

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CODE OF ETICS

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GLOBAL IMPACT

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ILLY SUSTAINABILITY MANIFESTO

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Methodological note

The Sustainable Value Report of illycaffè was published for the first time in 2012: regularly published on an annual basis, the report is intended to be a tool to account for the responsible management of the company, which aims to increase its ability to generate value within the framework of the respect of all existing equilibriums at the basis of the sustainability concept (economic, social and environmental), giving the proper attention to the expectations of all stakeholders who, either directly or indirectly, are interested in the activities of the company. The Value Report, moreover, responds to the commitment, initiated by the company over the years, to communicate a path toward responsible growth, based on responsible behavior and practices, and sustainable products.


Guidelines and reporting process

The 2016 Sustainable Value Report was created in compliance with the G4 version of the “Sustainability Reporting Guidelines,” issued by the Global Reporting Initiative (GRI), and the sector guidelines (G4 Sector Disclosure – Food Processing Sector) at the “In accordance-Core” level.
In order to finalize the Sustainable Value Report, the company actively involves all the different management departments operating at illycaffè headquarters and the reference branches. The reporting process is based on information systems used by the company (management control, accounting systems, quality, environment, internal audit, safety, human resources management, etc.), which are integrated with specific instruments to gather and analyze data (reporting forms). The ultimate objective of the company is to further strengthen the reporting system, and to extend the approach to all the companies and enhance the accuracy and reliability of the information provided. The reporting process of these issues is a voluntary activity that illycaffè implements taking as its starting point the huge importance of the areas dealt with and in the interest of its stakeholders. In spite of the fact that it does not fall within the boundaries of the Barnier Directive 2014/95/UE on the disclosure of non-financial information and information on diversity, illycaffè is committed to producing its Sustainability Report annually.
The 2016 illycaffè Sustainable Value Report has been verified by the external control and audit company DNV GL Business Assurance Italy, S.r.l. A copy of the assurance statement is available at the following link.


Reporting perimeters

This report has taken into consideration the most relevant industrial and commercial companies included in the Financial Statement of illycaffè S.p.A., through the integrated method in the consolidated balance sheet as of December 31, 2016 (see § 1.2).
• ILLYCAFFÈ SPA (Parent group that comprises the branches in in Austria, Germany, Netherlands, Spain, Hong Kong and Dubai)
• ILLYCAFFÈ FRANCE SAS
• ILLYCAFFÈ NORTH AMERICA INC
• ILLYCAFFÈ SUD AMERICA COM. IMP. EXP. LTD.
• ILLYCAFFÈ SHANGHAI CO. LTD
• MITACA SRL

In some cases, information and data relevant to performance refer to certain companies: in this case, the report makes clear reference to the variation of the perimeter of reference. As the GRI standard requires the inclusion of all activities having a substantial impact in terms of sustainability (materiality), wherever possible the report includes a deeper analysis of related sectors of the value supply chain (for instance, the activities carried out in coffee plantations).


Contacts

For comments, requests for information, suggestions and ideas for improvement regarding the sustainability activities of illycaffè and issues related to the content of the present Value Report, please e-mail: valuereport@illy.com

GRI charts

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CONTACT US

If you have any further questions or comments regarding sustainability, we would be happy to provide information about our vision, as well as about our specific objectives and targets.


illycaffè S.p.A.
Via Flavia 110, 34147 Trieste - Italy

valuereport@illy.com

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Identity and value

Key numbers of illycaffè

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140

countries in which illycaffè operates

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100.000

retailers serving illy coffee

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236

illy caffè and illy shops worldwide

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1.500

and more Artisti del Gusto worldwide

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22

new single-brand POS opened in 2016

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1.269

employees as of 31 December 2016, at the consolidated level, + 8% compared to 2015

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460,387

million Euros in overall turnover (+5,3% compared to 2015)

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5

certifications: 4 quality certifications and 1 sustainability certification

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5

specialized laboratories

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4

cutting-edge innovations from research activities conducted by illycaffè

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25

university of coffee

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Mission, Vision, Values

MISSION

To delight all those people, throughout the world, who cherish the quality of life and beauty, through the best coffee nature can provide, enhanced by the best available technologies and by art.

VISION

Our objective is to become a worldwide reference point in the culture and excellence of coffee: an innovative company offering the best products together with the best locations to enjoy them, thereby becoming a leader in the high-end sector.

VALUES

Ethics. We create and share long-term value with our stakeholders through our commitment to improvement, transparency, sustainability and personal development. Excellence. We want to create enthusiasm in our clients, creating extraordinary experiences and products which stand out for their beauty and for being beautifully manufactured, working fast and effectively to satisfy our clients’ needs and desires.

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Sustainability Strategy and Governance

The inspiring principle of illycaffè is the continuous striving for perfection. This driving force is expressed through two different founding values: the passion for excellence, intended as a love of beauty and a job well done; and ethics, the creation of long-term value through sustainability, transparency, the betterment of people, creating value, fostering social growth, and respecting the environment. illycaffè is a stakeholder company which pursues the betterment of life through economic, social and environmental sustainability.

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SOCIAL

illycaffè pursues social sustainability through the concept of growth, in the sense of knowledge and self-realization.

ENVIRONMENT

illycaffè pursues environmental sustainability through the concept of respect which translates into the principles of not polluting, not wasting and using renewable resources.

ECONOMIC

illycaffè pursues environmental sustainability through the concept of creating shared value with all its stakeholders.

In the hierarchy of stakeholders, consumers are placed at the top, followed by customers, who are partners of the company in offering the best products and services to consumers. Then, talents collaborating with the company are placed in the next step, as the excellence of products could not be achieved without their passion, competence and professional commitment to the company. Suppliers also have a crucial role in ensuring the delivery of our products, as well as all the communities sharing relations with illycaffè. Shareholders form the base which sustains the company.

Consumers

Clients

Collaborators

Suppliers

Communities and institutons

Shareholders

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The history of illycaffè and the stages of sustainability

1932

THE FIRST PATENT

Submission of the application to patent in Italy the process of pressurization (released in 1934). The patent has been released in Germany, in 1933.

1933

ILLYCAFFÈ

Francesco Illy founds illycaffè.

1934
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ILLETTA

Francesco Illy invents “Illetta”, the prototype modern coffee machines, and the pressurization process: a revolutionary method for preservation of food.

1965
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THE HEADQUARTERS IN TRIESTE

illycaffè inaugurates the head office in Trieste and the first laboratory site. The Headquarter in Trieste is presently still the only production plant of illy worldwide.

1974
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COFFEE POD

First company in the world to launch in the market coffee pods for the preparation of cafè-like high quality coffee, also for domestic use.

1988

DIRECT TRADE MODEL

illycaffè starts a direct contact with its growers to purchase coffee, stimulating quality improvement through economic surplus.

1991
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PRIZE FOR QUALITY COFFEE

First Edition of the illy Prize for Quality Coffee in Brazil. Since its first edition, the Prize initiative has been always coordinated by Anna Illy.

1992
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ILLY ART COLLECTION

The illy Art Collections are created, an artistic reinterpretation of the white espresso cup designed by Matteo Thun.


QUALITÈ FRANCE

illycaffè obtains the Certification “Qualit. France” (issued by Qualit. France SAS) for the high sustainability and quality of the illy products.

1996
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THE LOGO

World-renowned artist James Rosenquist creates the new icon for the illy logo.


ISO 9001

illycaffè is the first coffee company in the world to be certified under the ISO 9001 framework for the quality management system

1997
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AROMALAB

Aromalab is the laboratory created by illy to foster the research on the chemistry of coffee with the intent to identify chemical compounds able to build up the aroma of blends of coffee and to evaluate the quality of green coffee and roasted coffee.

1999
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WATER AS PRIMARY GOOD

illycaffè improves the techniques of cultivation and coffer process obtaining as result the reduction of water consumption up to 90% per kg of green coffee.


UNIVERSITÀ DEL CAFFÈ

illycaffè creates the Università del Caffè (University of Coffee), a center of excellence to foster the promotion and dissemination of knowledge on the culture of quality coffee, from the bean to the cup.

2002
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PROJECTS IN GUATEMALA

illycaffè launches a new programme in Guatemala to foster Micro- Entrepreneurship and training of coffee growers.


SENSORYLAB, TECHLAB AND BIOLAB

illycaffè creates three new laboratories to carry out research on all the possible issue related to coffee.

2003

ESPRESSAMENTE ILLY

illy inaugurates the opening of a chain of franchised cafès, to let people experience and appreciate the genuine taste of the Italian-Style cafès worldwide.


ISO 14001 ENVIRONMENTAL CERTIFICATION

illycaffè obtains the release of a new certification for high efficiency of environmental management system and for the control of the environmental impact of the industrial process.


LOW EMISSION ROASTING FACILITY

illycaffè introduces a new roasting facility in Trieste, based on a novel system with ultra-low emission of fumes during the coffee toast process.

2004

EMAS ENVIRONMENTAL CERTIFICATION

illycaffè continues the efforts to improve environmental impact in cooperation with EMAS in order to foster increase of environmental efficiency of industrial activities.


ERNESTO ILLY SCIENCE PRIZE

In occasion of the candidacy of Trieste for the Expo 2008, illy started a cooperation with TWAS - The Academy of Sciences for the Developing World, launching a Science Prize dedicated to researchers from developing countries.

2005

EMAS AWARD

illycaffè committment to the improvement of environmental impact of industrial processes is recognized at international level: the Company is awarded by EMAS for continually improving environmental standards.


INITIATIVES IN ETHIOPIA

Through the support and endorsement of the International Coffee Organization, illycaffè launches a project in Ethiopia in cooperation with the United Nations aiming to demonstrate that, upon treatment after harvesting, the quality of Ethiopian Coffee can be comparable and competitive with the best coffee blends in the world.


BRC - BRITISH RETAIL CONSORTIUM

illycaffè obtains the BRC (British Retail Consortium) certification and implements its commitments in the certification of safe food and products.


FOOD SCIENCE LAB

illycaffè founds the Food Science Lab, a laboratory dedicated to the study of food and of consumable products based on coffee.

2006
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IPERESPRESSO

illycaffè launches in the market the new system of coffee capsules, called “Iperespresso”.

2007

IFC CERTIFICATION

illycaffè obtains the IFS (International Food Standard) certification, confirming the commitment of the company to ensure high quality of standards for food safety.

2008

ILLY ISSIMO – READY TO DRINK

illy issimo is launched on the market: it is a new ready-to-drink line of espresso-style coffee beverage and it is the result of a joint venture with The Coca Cola Company.


FONDAZIONE ERNESTO ILLY

The Foundation is created in honor of Ernesto Illy in order to give continuity to the teachings and knowledge of Ernesto Illy, to whom the Foundation is dedicated.


OXFORD UNIVERSITY

In cooperation with the Environmental Change Institute of the Oxford University, illycaffè supports a research project on the sustainability of coffee cultivation and production.


AWARD IN BRAZIL

illycaffè launches in Brazil the “Sustainable Conduct Award” initiative, a prize dedicated to coffee growers reaching high sustainability standards.


ATLANTIC RAINFOREST IN BRAZIL

illycaffè starts a partnership with Istituto Terra (Earth Institute) for a reforestation intervention in a large area of the Atlantic forest region of Brazil.

2010

ISO 17025

AromaLab and SensoryLab of illycaffè are recognized and accredited by Accredia – Italian Accreditation System.

2011
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ILLYSHOP AND ILLYTECA

Creation of illyshop and illyteca: they are single-brand boutique shops offering the entire catalogue of illy products commercially available. Moreover, ILLYTECA is a retail point, in which are available all the products, technologies and accessories with the brands of the five shareholders of illy Group.


RESPONSIBLE SUPPLY CHAIN PROCESS

illycaffè is the first company in the world to be awarded with the certification for the "Responsible Supply Chain Process".

2012
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1° SUSTAINABLE VALUE REPORT

illycaffè launches a communication initiative addressed to all its stakeholders: the initiatives underlines and fosters the commitment of all the parties involved to the implementation of the sustainability concept.


GLOBAL COMPACT

illycaffè becomes part of the United Nations Global Compact.


CARBON FOOTPRINT

In collaboration with the Italian Ministry of the Environment, illycaffè launches a project to estimate its carbon footprint over the entire lifecycle of its industrial process.initiative

2013-2016
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WORLD MOST ETHICAL COMPANY

illycaffè is the only Italian enterprise selected to be included in the list of the most ethic enterprises in the world for the year 2013, on the basis of the Etisphere Institute, the organization which yearly finalize the list.

2015
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EXPO 2015 OFFICIAL COFFEE PARTNER

illy has been selected by the Steering Committee Expo as Official Coffee Partner: illy is the exclusively responsible in charge for the Coffee Cluster of the Exhibition, with the responsibility to formulate and manage the content and event of the cluster, hosting and valorizing the participation of the ten countries representing the coffee producers in the world. The selection of illy to cover this prestigious role is a recognition for the company to be driven by excellence, passion, innovation and commitment to sustainable development.

2016

ERNESTO ILLY INTERNATIONAL COFFEE AWARD

An award is created for the best coffee selected from the ones grown in the regions that make up the unique illy blend and it involves all farmers the company works with. It is also a tribute to Ernesto Illy, a visionary leader, always interested in scientific research.

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HIGHLIGHTS 01
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social value

Clients and served markets

illycaffè recognizes the centrality of human resources and the importance of basing collaboration on the principles of transparency, loyalty and trust, applying the practices dictated by its Code of Ethics and by the co-responsibility agreement that the people employed by the company have adopted.

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Distribution strategies focus on building value over the long term. The client’s professional growth is fostered by applying a strategic model which combines the commercial aspect with the concept of sustainability. In this way, the social value generated by illycaffè is transformed into economically positive results for the client, too, in terms of the volume of coffee sales.


The distribution of illycaffè products occurs primarily through
the following channels for the organization’s sectors:

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Business to Business

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  • Ho.Re.Ca: Hotel, Restaurants, Cafè
  • Traditional retail
  • Organized large-scale retail trade
  • Eldom (consumer electronics market)
  • Vending (offices and workplaces)
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Business to Consumer

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  • illy Shops
  • illy stores (espressamente illy e illy Caffè)
  • e-commerce
HIGHLIGHTS 02
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illycaffè people

illycaffè recognizes the central role of people, who are strategic stakeholders, and the importance of maintaining transparent relationships based on mutual loyalty, trust and on the application of the principles of the Ethical Code adopted by the company.

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13% in North America

3% in South America

20% of the personnel is employed in other companies with headquarters in Europe

About 59% of the personnel is employed in the Italian companies of illycaffè (61% in 2015)

5% in Asia

HIGHLIGHTS 03
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illycaffè and communities

Initiatives continue to be developed that have a powerful social impact in coffee producing countries.

- Agreement with the Ernesto Illy Foundation and the United Nations Industrial Development Organization (Unido) where the objective is to increase Ethiopia’s coffee quality and production capability, and to permit small farmers to boost their earnings, fostering local economic growth and obtaining international recognition.

- Agreement with SENA (Servicio Nacional de Aprendizaje), the Colombian public institution, which aims to create international cooperation in order to transfer knowledge and good practices in the production and preparation of coffee, creating benefits both for producers and for consumers. Several sections and rules included in the Code, for example those relevant to the respect of Human Rights, are also applied to the purchases and along the supply chain.

- Donations for 450,000 Euros made by the parent company in Italy to charitable organizations in 2016 and 520,000 Euros made by foreign companies in donations, sponsorships, in-kind contributions and other activities for the community.

Human rights

The concrete engagement of illycaffè in respect of human rights
has been translated over the years in several initiatives, such as:

  • Endorsement of the principles stated by the ILO – International Labour Organization: illycaffè purchases goods and services only in countries subscribing ILO standards regarding the minimum age prescribed for minors, 14 or older.
  • Application and explicit reference to respect of the Ethical Code, which includes strict clauses on upholding Human Rights in the procurement processes and contracts. Several sections and rules included in the Code and relevant to the respect of Human Rights are also applied along the whole supply chain. A dedicated Supervisory Body has been created to control and monitor potential violations of the correct application of the Ethical Code.
  • A constant monitoring of coffee suppliers is carried out in order to ensure full respect of the relevant national labor laws, through the certification issued in the Responsible Supply Chain Process.
  • The formulation of the Sustainability Manifesto.
  • Participation in the Global Compact initiative, since 2012.
HIGHLIGHTS 04
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The creation of social value

The business model developed by illycaffè aims
to create social value through the concept of growth.

Consumers

By choosing illy products, consumers have the chance to live an enriching experience, combining the quality of the product with the opportunity to learn more about coffee and coffee culture, while identifying with the corporate values.

Clients

Clients who decide to serve illy in their businesses have the opportunity - through the Università del Caffè and the services offered by illycaffè - to increase their own knowledge and professionalism.

Employees

Employees are given opportunities for self-realization, skills development and professional growth. illycaffè fosters a philosophy of “lean” work, centered on improving teamwork which valorizes abilities, entrepreneurialism and individual creativity.

Suppliers

Suppliers who work with illycaffè benefit from advantages to their reputation and the acquisition of know-how. In the specific case of green coffee producers, illycaffè helps improve their living conditions by promoting projects in the coffee-growing areas.

Community

The visibility of communities where the company works is enhanced, and they benefit from direct contributions to initiatives fostering culture and solidarity.

Shareholders

Shareholders reap the fruits of the reputation and legitimization deriving from the value created along the whole chain.

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HIGHLIGHTS 01
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environmental value

Recommencing with the future,
starting from the present

Environmental commitment is of crucial importance to illycaffè: on the one hand it governs its direct impact on the ecosystem and on the other it adopts processes that promote and disseminate proper values and actions, from farm to cup.

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Thanks to this awareness, the company implemented an environmental management system aiming to foster the maintenance of sites which respect the environment and are certified. illycaffè has invested huge sums in order to minimize the direct impact of its production processes, in terms of energy efficiency and the sustainable management of waste.

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Raw materials

illycaffè’s main raw material is raw green coffee. Every year it buys hundreds of thousands of sacks of Arabica coffee from producers in Latin America, countries in Africa and Southeast Asian countries. The company is aware that the production of the raw material plays an important role in the indirect environmental impact of its activities and monitors the phases of the raw materials, from the plantations to the transport.

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HIGHLIGHTS 03
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Product disposal and recyclable packaging

illycaffè designs and implements innovative solutions to dispose of products in the most environmentally and socially efficient manner possible, using an approach based on the principles of circular economy:

REDUCTION AND MINIMIZATION

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The designing phase, which adopts technology to optimize the quality of the coffee, takes into consideration primary and secondary packaging which weighs as little as possible, has a low consumption and, wherever possible, is made from recyclable materials and/or those with a low environmental impact.

REUSE

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For secondary packaging, the company favors purchasing recycled material, which on average makes up 80% of the paper and cardboard purchased and 100% of the pallets used.

Recycle

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Favored designs are those using recyclable packaging made with non-composite materials (metals or plastics).

Innovations in packaging introduced by illycaffè include:

SOFT CAN

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Distributed since 2014, Soft Can is a new illy blend pack for the home, designed to reduce environmental impact. Through pressurization, Soft Can keeps quality intact through the pressurization process. Thanks to the 5-layer polylaminate-aluminum packaging, it is lighter and can be recycled with plastic, thus reducing its environmental impact.

ESPRESSO CUBE

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The packaging was created to replace the aluminum can, in order to reduce the environmental impact.

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Sustainable agriculture and biodiversity

illycaffè incorporates the principles of environmental responsibility in its business operations and in managing raw materials, in particular green coffee.

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The company invests in the local area and in support of the communities it interacts with: in the production areas it promotes low environmental impact agronomic techniques, aiming at reducing the most significant impacts of farming and fulling respecting biodiversity and ecosystems. Moreover, the company has developed dedicated programs of incentives and recognitions for producers who work towards sustainable quality, such as the new Ernesto Illy International Coffee Award, the Ernesto Illy de Qualidade do cafè para Espresso Prize, and the Clube illy do Cafè.

Prêmio Ernesto Illy de Qualidade do Café para EspressoSince 1991, 10,000 producers
have participated with a total of funding of approximately 4.5 million reais distributed.

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HIGHLIGHTS 01
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economic value

HIGHLIGHTS 01
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The supply chain

illycaffè manages the entire supply chain within the overall framework of sustainability. This approach is certified by an independent, third party evaluator through the Responsible Supply Process.

Traceable and guaranteed
supply chain

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HIGHLIGHTS 02
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Responsible supply chain process

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illycaffè is the first company in the world to have received, in March 2011, the “Responsible Supply Chain Process” certification, which designates a crucial role to the quality achieved and the ability to create value for all stakeholders along the entire green coffee supply chain. The company decided to commit to this in order to introduce management solutions and evaluation systems that can detect and communicate responsible value creation throughout the entire supply chain. The strategic orientation behind this certification is based on principles of traceability, reciprocity and quality. The “Responsible Supply Chain Process” certification does not involve any direct costs for coffee producers: illycaffè bears the overall expenses for certification activities and inspections, including those carried out at the producers’ farms.

AREA
PROTOCOL B REQUISITES FOR THE PRODUCTION CHAIN
ENVIRONMENT
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  • Use of soil
  • Water withdrawal
  • Quality of water
  • Impacts on local community
  • Biodiversity
CONDITIONS
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  • Agronomic practices used
  • Equipment used in the production phase
  • Working conditions
  • Risk of accident or injuries
  • Capacities and competencies of workers
PRODUCTS
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  • Use of active ingredients
  • gricultural Technologies applied
  • Equipment used in the production phase and working conditions
  • Hygiene
HIGHLIGHTS 03
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433,3 milioni di euro

economic value produced and distributed in 2016

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1.900

coffee producers have received a specific audit, according to the Responsible Supply Chain Process (until end of 2016).

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7.000

farmers involved in courses, conventions and visits from specialists between 2010 and 2016.

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397

patents, including 283 granted and 114 pending as of 31 December 2016.

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4,8

million Euros in research and development in 2016.

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9

papers published in international scientific journals, 8 poster communications presented and 7 lectures at important national and international scientific conferences.

The innovations introduced in recent years

2005
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IPERESPRESSO CAPSULES

It is the third-generation espresso system: protected by 5 international patents, with the help of the two infusion and emulsion phases, it allows you to make coffee with a dense, velvety and persistent cream in restaurants or at home.

2007
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X2

The first profeSsional Ho.Re.Ca. with boiler, using Iperespresso capsules.

2008
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Idillyum

The first type of mono-variety coffee with a low level of natural caffeine, possessing an unique sensorial and refined scent.


ILLY ISSIMO /READY TO DRINK

A ready-to drink product for the consume out of home. Without additive colorants and preservatives, illy Issimo is the result of the cooperation between illy and The Coca Cola Company and offers the possibility to enjoy the best quality coffee in the form of a chilled beverage ready to drink.

2009
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ILLYCREMA

frozen soft ice-cream produced with espresso illy 100% Arabica coffee and ice micro-crystals, without hydrogenated fats, colorants or preservatives.

2010
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X7.1

X7.1 is the evolution of the X7 model, using boiler technology in compliance with the norms relevant to the emissions of heavy metals.


Y1

home machine coffee maker using Iperespresso capsules, made of aluminum and glass, equipped with an automatic system for the expulsion of capsules. Working upon thermic control and electromechanical commands.

2011
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X2.1

evolution of the X2 model, equipped with, with thermo-block technology and in compliance with the norms relevant to the emission of heavy metals.


Y1 TOUCH

Y1 touch, an evolution of the Y1 with soft-touch control panel and electronic management.

2013
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Y5

New Iperespresso home coffee machine with automatic drain, an extension of the “Y” series.


X7.1

Limited edition in fluorescent colors, designed for the Christmas seasonal campaign of 2013.

2014
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REFILLY / SOFT CAN

The refill for the home fits inside the 250-gram can and is designed to reduce its environmental impact.

2015

MOKA PULCINA

Pulcina is a revolutionary moka coffeepot combining the technology developed by illycaffè with the design experience of Alessi. Thanks to the internal shape of its special boiler, Pulcina automatically stops dispensing the coffee with precision timing, thus avoiding the minor eruptions in that final stage of extraction that can leave a burnt, bitter aftertaste, and ensuring that the coffee emerges at its best, with the full rounded aroma intact.

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